Ore export duty rollback will kill steel biz: ASSOCHAM

Industry body ASSOCHAM on Monday cautioned the government against renewed demand of a section of mining industry for reviewing export duty structure on iron ore saying it would have an adverse impact on the steel sector.

ASSOCHAM said in a statement that in a letter to steel secretary DRS Chaudhary it has referred to the structural deficit of iron ore availability for domestic steel industry owing to an upper cap in iron ore production together with various environmental concerns.

"Rather," ASSOCHAM said, "the government must stay vigilant and not repeat the experience of illegal mining caused by un-restrained iron ore exports and interests of the steel industry should be receive government's attention."

"India has added huge capacity for agglomeration - pelletisation and sintering - in past few years due to government decision to adopt fiscal measures to conserve iron ore against demand of steel industry to ban iron ore exports," said ASSOCHAM and hailed the policy to conserve natural resources by imposing 30-percent export duty on iron ore and differential railway freight for domestic and export sectors.

India has got about 115 million tonne (MT) of agglomeration capacity against the production of over 101 MT of fines considering that the country produced about 170 million tonne (MT) of iron ore in 2011 including over 66 MT of lumps and over 101 MT of fines.

"Thus the argument that India does not have enough capacity to utilise iron ore fines is incorrect and factually wrong," said ASSOCHAM adding India is likely to have 170 MT agglomeration capacity (84 MT for pellet-making and 86 MT sinter-making capacities) by 2014.

In its letter, ASSOCHAM further claimed that merchant iron-ore producers in Orissa are deliberately holding iron-ore fines stock and are selling the lumps at Rs 7,500-Rs 8,000 per tonne thereby making windfall profits.

Odisha supplies iron-ore lumps to various sponge-iron producers in Jharkhand, Chhattisgarh and West Bengal and the eastern region has added about 21 MT agglomeration capacity, including over 15 MT pellet and over five MT sinter during last five years based on supply of iron ore fines from merchant miners.

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